The Financial Services Authority in the United Kingdom:
The Financial Services Authority (FSA) in the United Kingdom (UK) is the financial watchdog. It is a company limited by guarantee and financed by the firms it regulates. It is an independent non-governmental body having been given statutory powers under the Financial Services and Markets Act 2000 (FSMA). The government decides the overall scope of the FSA's regulatory activities and for its powers. It has been the single market regulator for financial services in the UK since December 2001. It is accountable to Treasury Ministers and through them to the UK Parliament.
The Treasury of the UK
The Treasury is the UK's Economics and Finance Ministry. It formulates and implements the government's financial and economic policy. It's objective is to improve the sustainable growth rate, rising prosperity and quality of life with economic and employment opportunities for all people in the UK.
Establishment and Development of FSA
In May 1997, the Chancellor of the Exchequer announced the reform of financial service regulation in the UK and the creation of a new regulator. It manages banking as well as securities industries which is known as Securities and Investments Board (SIB). The SIB formally changed its name to the Financial Services Authority (FSA) in October 1997.
The FSA regulates most financial services markets, exchanges, and firms. It sets the standards that they must meet and can take action against firms if they fail to meet the required standards.
The first stage of the reform of financial service regulation was completed in June 1998, when the responsibility for banking supervision was transferred to the FSA from the Bank of England. In May 2000, the FSA took over the role of the UK Listing Authority from the London Stock Exchange. In fact, the FSA became a single regulator for financial services in the UK since December 2001, when it was provided with statutory powers by the FSMA.
Soon after FSMA received Royal Assent in June 2000 and was implemented on 1 December 2001, it transferred to the FSA the responsibilities of several other organizations:
- Building Societies Commission.
- Friendly Societies Commission.
- Investment Management Regulatory Organization.
- Personal Investment Authority.
- Register of Friendly Societies.
- Securities and Futures Authority.
In addition, the legislation entails some new responsibilities like initiating action to prevent the market abuse. In October 2004, following a decision by the Treasury, it took upon the responsibility for bringing mortgage regulation. In January 2005, to implement the Insurance Mediation Directive in accordance with the Government announcement in 2004, it took over regulation of general insurance business.